This is the third podcast in the EconTalk Book Club discussion of The Theory of Moral Sentiments by Adam Smith. In this episode, Dan Klein of George Mason University and EconTalk host Russ Roberts discuss Part II of the book.

Highlights

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Podcast Highlights

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0:36

Intro. What is Part II about? Merit and demerit: consequences and effects of actions as well as the motives. Gratitude and resentment, compounded sentiments: the action one is grateful for, Jim helps neighbor Jim, both motives and consequences and effects matter. Merit elicits gratitude and deserves reward. Demerit deserves punishment and occasions resentment. Moral agency in reacting: not enough to just feel gratitude or resentment. Desire to transform, educate person more than punish. Discovery procedure, Hayek's phrase. Passive sentiments: love and esteem, hatred and dislike. Earthquake in China. Business opening up, someone prospering: matters if you make me a moral agent of that happening. Violating justice is abhorrent. Efficiency, willingness to pay or be paid. Tariffs: remove a tariff, domestic workers harmed but consumers better off. Standard [Hicks] is that that's efficient if the gainers could compensate those who could be harmed. Seems precise and accurate, but morally bothersome. Compensation never takes place; and then have to ask: Should it take place? If someone has artificially benefited and then stops benefiting, should you compensate them? Quotas, sugar, dairy products; ask if consumers want to remove the quotas and they may not be willing to push the button. To a non-economist, the economist's argument for free trade, using one's gifts and talents.

9:57

Salvage efficiency criterion: citizen not willing to push the button, enlightened preferences after reading Smith. Loose, vague, and indeterminate. Spectating an actor and one acted upon: how we evaluate depends on the actions and the reactions of the one acted upon. Lectures on Rhetoric and Belles Letters. Godzilla stomping on Manhattan, footage, people are amazed. Suppose actor is a murderer: how do you sympathize with the person who is dead? P. 71, illusive sympathy, imaginary resentment. Method is spectatorial construct. Spectator is always mediating our reactions. Beginnings of the impartial spectator, which really doesn't come in till Part III. How does the acted upon see it? Relates to politics: government seems to be generous, consult those acted upon, might feel gratitude; we must see the actor in the same light. If we don't agree with the recipients sentiments we may not have that same praise for the original actor. Does Smith want us to look at the recipients or to use our own judgment if we think it's immoral, destructive, or harmful? We can not enter into that gratitude. Government not generous, acting with other people's money; but that's the way some people think of it. Last podcast: matters if people express their feelings; if they stop, action is less seen. Pp. 77 and thereafter, providential nature, nature gave us an instinct for revenge. Nobody intends to make the world better by taking revenge. In a world without a law against murder, there would be more revenge. Original and immediate instinct. Evolution.

21:07

P. 78, long footnote continued, illusive sympathy. Another aspect: Suppose Jim acted on Burt and Burt fails to be grateful, and Jim's act was meritorious. How do we approve when there is no gratitude? We imagine a Burt who was grateful. Insert a spectator, even if manufactured to suit the judgment. Another point: "Hunger, thirst,..."; providential law of unintended consequences, hidden consequences, providential invisible hand. Third point: Justice and beneficence, discussed in first podcast: Justice can be enforced with force, whereas beneficence has to be voluntary and free--among equals. Justice like grammar is precise; justice is of a negative nature. You don't praise for getting grammar or justice right; satisfying grammar or justice is not cause for praise or approbation. Beneficence, like aesthetics, is both positive and negative. Turn in blank homework has perfect grammar, but totally failed. Bible: Do not stand idly by. Does Michael Phelps have obligation to help someone drowning? Smith's commutative justice would not go so far as to punish the person who stands idly by. P. 82, reputation. "Abstaining from what is another's" later in the book, commutative justice. Here in Part II Smith doesn't use the adjective "commutative," and doesn't speak of beneficence as "distributive." Implicitly saying "Don't call these other things justice."

31:34

P. 82-84, "sacred laws of justice"--some of best writing so far. You think more about yourself than other people do. "Though every man may, according to the proverb, be the whole world to himself, to the rest of mankind he is a most insignificant part of it...". "In the race for wealth, and honours, and preferments, he may run as hard as he can, and strain every nerve and every muscle, in order to outstrip all his competitors. But if he should justle, or throw down any of them, the indulgence of the spectators is entirely at an end. It is a violation of fair play, which they cannot admit of...". "To be deprived of that which we are possessed of, is a greater evil than to be disappointed of what we have only the expectation," discussed last time. P. 87 and following: utility not our primary source of sentiment, but notions of justice are. P. 85: Start of Chap. III, basically saying if the relationships between us are purely mercenary, our interactions will not be as effective. "It is thus that man, who can subsist only in society, was fitted by nature to that situation for which he was made. All the members of human society stand in need of each others assistance, and are likewise exposed to mutual injuries. Where the necessary assistance is reciprocally afforded from love, from gratitude, from friendship, and esteem, the society flourishes and is happy. All the different members of it are bound together by the agreeable bands of love and affection, and are, as it were, drawn to one common centre of mutual good offices." Seems to contradict the usual view of Smith, but not a contradiction. "All the different members of it are bound together...". Center--shared part of it? what does that mean? Metaphorical, cooperating in one vast enterprise, myth of that as a common center. Different interpretation: capitalism doesn't work well unless you have--fill in blank--say, trust. Argued that we have to use top down methods to enforce that. Buy a house, specify in closing contract what comes with the house, but not everything. House has a certain vague and indeterminate aspect. Can still sell houses if people are grasping and inconsiderate, but it works better if people are considerate. Not lovey-dovey, though. All that's necessary is the maintenance of justice. Three contrasted worlds. Utility discussion. P. 89: sometimes people advocate measures that we think are wrong, misguided interventions. "We must show them...". You ought to oppose these measures for reasons other than that you don't like the people merely for advocating those measures. Cast about for other reasons.

47:08

Section III, long section on chance, luck, irregularity of sentiment. Breaks out three things on which praise and blame are based: intentions; actions, affections of the heart or actor that actor's action; consequences of what he did. Insights into psychology: architect who doesn't get so much credit. Got to have some agency, general with brilliant scheme who doesn't get to implement it. A for effort. Should be equal praise, but sometimes people don't get equal praise. Friend solicits an office for another friend. Smith even calls it unjust when the effort doesn't get praised. Messenger of bad news is disagreeable to us. Historical example, king lops off head of messenger delivering the bad news, unfair but somehow tolerated. Throw large stone over a wall, but one stone kills somebody and other doesn't: law punishes the one who kills somebody. Different kinds of negligence. If it were based only on intentions or effort, it could create an inquisition, scrutinizing everyone's efforts; won't work. Sacred regard against negligence. Principles as well as passions and sentiments. Monitoring costs. Doesn't speak about the knowledge problems, but implicit. P. 99, Worth mentioning: passage where he says when trying to commit a crime never punished as severely as when someone commits the crime. Shooting to kill. "The case of treason is perhaps the only exception...". How much we respect people who do things that are positive or disrespect those who do things that are negative when they are the actors rather than the planners. Sportometrics. Author of nature designed it this way. "That necessary rule of justice, therefore, that men in this life are liable to punishment for their actions only, not for their designs and intentions, is founded upon this salutary and useful irregularity in human sentiments concerning merit or demerit, which at first sight appears so absurd and unaccountable. But every part of nature, when attentively surveyed, equally demonstrates the providential care of its Author, and we may admire the wisdom and goodness of God even in the weakness and folly of man." N.B. "Author" has capital "A". How should one take Smith on the providential points? Great appreciation of focal points, reality as a fog. How things pan out is a focal point in how to proceed in our understandings of propriety. Justice based on effort sounds nice, but no focal points to hang it on. Next page, monitoring costs: Smith wants to justify emphasis on results over intention is that we want people to work together. If we reward people solely on the basis of their intentions, we will get more intentions than results.

"The causes of pain and pleasure, whatever they are, or however they operate, seem to be the objects, which, in all animals, immediately excite those two passions of gratitude and resentment. They are excited by inanimated, as well as by animated objects. We are angry, for a moment, even at the stone that hurts us. A child beats it, a dog barks at it, a choleric man is apt to curse it. The least reflection, indeed, corrects this sentiment, and we soon become sensible, that what has no feeling is a very improper object of revenge. When the mischief, however, is very great, the object which caused it becomes disagreeable to us ever after, and we take pleasure to burn or destroy it. We should treat, in this manner, the instrument which had accidentally been the cause of the death of a friend, and we should often think ourselves guilty of a sort of inhumanity, if we neglected to vent this absurd sort of vengeance upon it."

You guys talked about shooting the messenger, and the guy who takes risks and makes it big vs. the guy who takes the same risks and is a failure. But I just love the insight that people get pissed off at the things that hurt us, even if it's a rock that obviously didn't do it intentionally since it has no intentions.

Ditto Sean’s thanks. I’m ashamed to say I had no idea such relevance was to be found in these older works.

II.I.16 “Those Princes, who have heaped, with the greatest profusion, wealth, power, and honours, upon their favourites, have seldom excited that degree of attachment to their persons which has often been experienced by those who were more frugal of their favours.”

This idea that gratitude is less felt when affections are given too easily, is, for many high school teachers, constantly on our radar. I was pre-disposed to give a lot of praise, and was thus always fearful that I might dilute its value.

Adam, regarding rock: I laughed too, especially at the fact that we take pleasure in the object’s destruction.

Was I correct in detecting shades of Hayek's spontaneous order in Smith's discussion of systems and their components?

"The wheels of the watch are all admirably adjusted to the end for which it was made, the pointing of the hour. All their various motions conspire in the nicest manner to produce this effect. If they were endowed with a desire and intention to produce it, they could not do it better. Yet we never ascribe any such desire or intention to them, but to the watch-maker, and we know that they are put into motion by a spring, which intends the effect it produces as little as they do." (page 87)

And though I have yet to read The Fatal Conceit, it seems to me that Smith is describing something like a fatal conceit when he says:

"When by natural principles we are led to advance those ends, which a refined and enlightened reason would recommend to us, we are very apt to impute to that reason, as to their efficient cause, the sentiments and actions by which we advance those ends, and to imagine that to be the wisdom of man, which in reality is the wisdom of God." (page 87)

In the first excerpt, I take Smith to be explaining that the context in which a system or component operates is crucial to understanding the function of that system or component. This seems intuitive enough to dismiss out of hand; I mean, no one thinks a tire manufacturer improves his product for the sake of making a tire that more closely resembles its Platonic form. He does so in the hopes that his improved tire will benefit the driving experience of a specific model of car. In fact, it could be argued that if a tire manufacture tries to make a perfect tire outside of the context of driving a particular car, he might damage the experience of driving it to such a degree as to make it unsafe.

Our emotional and sentimental feedback loops are likewise understood more completely by observing them within their social and political life-contexts, namely how approbation and disapprobation provide a basis for merit and demerit, and ultimately, justice.

I think the second excerpt describes a sort of fatal conceit: the desire to credit human rationality and design for a well-functioning system when human rationality most likely had nothing to do with it. I believe Smith actually says that we ourselves may be parts of such a system-- meaning we take part in something that produces good, we see the result and then take credit for it, even though the process may have been more complex than we could ever hope to understand!

Regarding Russ's last, I think the sources for Smith's or for Hayek's thinking about spontaneous order would be diffuse. For Smith, I think Mandeville must have been big, as well as his teacher Hutcheson, and probably Hume's economics and other evolutionary tendencies. Ferguson was Smith's contemporary (in fact, it seems they were born nearly the same week), and I wouldn't say Ferguson was particularly influential on Smith. As for Hayek, again, I don't think you can point to a specific source. Surely Menger and Mises would figure prominently in his years up to age 30. I think Hayek first uses spontaneous order in The Constitution of Liberty (1960, 160), and credits Michael Polanyi's The Logic of Liberty (1951) for it. But Hayek addresses the general idea, and refers to Hume and Smith, as early as his 1933 lecture "The Trend of Economic Thinking." Someone, btw, who I think was much more influential up to that time than shows in the citations is Herbert Spencer. I think that a lot people, perhaps Hayek, were influenced greatly by him but didn't cite him because doing so would be politically/academically incorrect.

Thanks Russ & Dan for the clarification. Being only superficially familiar with Hayek, I never knew to what degree Smith influenced him.

I just finished reading Dan's "Liberty, Dignity and Responsibility: The Moral Triad of a Good Society". I highly recommend it to those who haven't read it yet. I found the portion on "The Interdependence of Dignity and Individual Responsibility" relevant to II.i.5.6 wherein Smith talks of our sympathy with the resentment of sufferers and our desire to see atrocity punished:

"Our sense of the horror and dreadful atrocity of such conduct, the delight which we take in hearing that it was properly punished, the indignation which we feel when it escapes this due retaliation, our whole sense and feeling, in short, of its ill desert, of the propriety and fitness of inflicting evil upon the person who is guilty of it, and of making him grieve in his turn, arises from the sympathetic indignation which naturally boils up in the breast of the spectator, whenever he thoroughly brings home to himself the case of the sufferer."

I’d like to think that Smith didn’t lightly toss off the bit about making the guilty party “grieve his turn”; we know that shared grief, by Smith’s estimation, is a pretty powerful sentiment. Involving grief in punishment is thus a powerful concept; it implies that the malefactor is capable of grief, that he is fully human. If he is capable of grief, he is capable of imagination, and thus in his grief, brought about by proper, just punishment, the malefactor is doing his part to protect society. He is engaging in the sentimental feedback loop—perhaps initially against his will—with those he wronged.

But only if we let him—only if we presume the wrongdoer capable of grief. If we don’t, if we consider him merely a vessel into which trite sentiments of social justice and economic determinism can be poured, or if we consider him a resentment multiplier who will eventually compound his punishment into more crime, then we do him and ourselves a disservice. We keep the malefactor from genuinely engaging in the sentimental feedback loop that allows sufferer and malefactor to appreciate their common humanity, because we consider him a cypher without moral agency or the ability to regulate his own behavior.

Dan says it better in describing the inhumanity of the modern "corrections" process:

"The offender is not treated as an integrated moral force that has desecrated the civil order; he is an incompetent, defective, self-contradictory moral force that needs correcting. He is not fully human and therefore should not be held fully to account."

Wanted to offer my thanks for this outstanding discussion. I hope Econ Talk will continue such discussions on other great economic books.

I hear Dan saying that when Smith mentions God he does so out of politeness or what is proper. Why does Dan think this, rather then believe that Smith is speaking from personal conviction on the existance of God?

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